The basis of the CWA was enacted in 1948 and was called the Federal Water Pollution Control Act, but the Act was significantly . Most of these alternative approaches have similar sign, magnitude, and precision as the main results. Iowa State and Center for Agricultural Research and Development. The Clean Water Act of 1972 protects the "waters of the United States" from unpermitted discharges that may harm water quality for humans and aquatic life. Keiser thanks the USDA for funding through the National Institute of Food and Agriculture Hatch project number IOW03909. Lack civil or criminal penalties for violations. Time of day controls are a cubic polynomial in hour of day. We now discuss six reasons the ratios of measured benefits to costs from the previous subsection may provide a lower bound on the true benefit/cost ratio. This explanation is less relevant for the slowing trends in continuous variables like BOD, fecal coliforms, or TSS. Research does find statistically significant but imperfect correlation between perceived local water pollution and objectively measured local water pollution (Faulkner etal. Most of the economic benefits (about 85 percent) are attributable to reductions in premature mortality associated with reductions in ambient particulate matter. Third, if some grant expenditures were lost to rents (e.g., corruption), then those expenditures represent transfers and not true economic costs. None of these ratios exceeds 1, though they are closer to 1 than are the values in TableVI. If you experience a problem reading a document with assistive technology, please contact us. These confidence regions do not reject the hypothesis that the ratio of the change in home values to the grants costs is zero but do reject the hypothesis that the change in home values equals the grants costs. We use the following regression to estimate the effects of Clean Water Act grants on water pollution: \begin{equation} The bid function is the consumers indifference curve in the trade-off between the price of a home and the amount of attribute j embodied in the home. Standard errors are clustered by watershed. Any opinions and conclusions expressed herein are those of the authors and do not necessarily represent the views of the U.S. Census Bureau. Because most grants were given in the 1970s, we observe water pollution up to 10years before and 1525years after most grants. These values are similar without survey weights, or when excluding outlier reported travel distances (above 150 miles). Water Pollution Control Act 1948. The Clean Water Act first appeared in American legislation in 1948 with the Federal Water Pollution Control Act. Second, this city-level difference-in-differences estimate cannot use the upstream-downstream comparison for identification. This assumption could also fail if changes in governments effectiveness at receiving grants are correlated with governments effectiveness at operating treatment plants. The Clean Air Act covers essentially all major polluting sectors. Each grant decreases dissolved oxygen deficits by 0.7 percentage points, and decreases the probability that downstream waters are not fishable by 0.7 percentage points. The only econometric analysis we know of such policies tests how the French policy of jointly taxing industrial air pollution and subsidizing abatement technologies affected emissions, using data from 226 plants (Millock and Nauges 2006). Data include decennial census years 19702000. The health of many aquatic species (so indirectly, the benefit people derive from a river) may depend nonlinearly on the area of clean water. Clean Water Act Cons. They conclude that nothing has changed since 1975. E[G_{py}d_{d}\cdot \epsilon _{dpy}|X_{pdy}^{^{\,\,\prime }},\eta _{pd},\eta _{py},\eta _{dwy}]=0. Another test comes from the fact that the 19802000 gross rent data reported in the census include utilities costs. Flint, Michigan, has recently had high lead levels in drinking water due to switching its water source from the Detroit River to the Flint River. Online Appendix F discusses other reasons we believe have weaker support. Because no reference category is required in this kind of event study setting, where one observation can receive multiple treatments, for ease of interpretation, we recenter the graph line so the coefficient for the year before treatment ( = 1) equals 0. Independent evidence is generally consistent with this idea. For the few governments that do not report when their fiscal year ends, we assume they report by calendar year. Some studies in historic or developing country settings, where drinking water regulation is limited, relate surface water quality to health (Ebenstein 2012; Greenstone and Hanna 2014; Alsan and Goldin forthcoming). Online Appendix FigureVII illustrates. One involves declining returns to abatement of pollution from point sources. At the same time, much oxygen-demanding pollution comes from agriculture and other nonpoint sources, and those sources have remained largely unregulated. If sewer fees were particularly important, then one would expect rents to increase more than home values do; if anything, the estimates of TableV suggest the opposite. Data include balanced panel of cities over 19702001, see text for details. These controls could help address possible omitted variables bias due to city growth in these difference-in-differences regressions, but are potentially a case of bad controls (Angrist and Pischke 2009) because they could be affected by grants. But municipal investments that occurred were closely connected to grants, and point estimates imply that the grant costs in our data accurately represent the actual change in spending. In this sense, the existence of the Clean Water Act did crowd out aggregate municipal investment in wastewater treatment. Hines (1967) describes state and local control of water pollution in the 1960s, which typically included legislation designating regulated waters and water quality standards, a state pollution control board, and enforcement powers against polluters including fines and incarceration. This is potentially informative because increased taxes, sewer fees, or changes in other municipal expenditures are likely to be concentrated in the municipal authority managing the treatment plant, whereas the change in water quality is relevant for areas further downstream. Our estimates are consistent with no crowding out for an individual grant, but the existence of the Clean Water Act may decrease aggregate municipal investment in wastewater treatment. Event study graphs corresponding to equation (4) support these results. Online Appendix TableIII shows these results and Online Appendix E.1 explains each. The Clean Water Act of 1977 was an important and controversial environmental regulation the United States Congress had passed. Official websites use .gov A few pieces of evidence help evaluate the relevance of these issues. We now compare the ratio of a grants effect on housing values (its measured benefits) to its costs. Third, this analysis is different from the question of what municipal spending (and pollution and home values) would be in a world without the Clean Water Act. The Clean Water Act (CWA) contains a number of complex and interrelated elements of overall water quality management. Temperature is increasing by about 1F per 40years, which is consistent with effects from climate change. Annual cost to make a river-mile fishable, 8. Dissolved oxygen deficit equals 100 minus dissolved oxygen saturation, measured in percentage points. Resources for the Future, Public Policies for Environmental Protection, The Impact of Intergovernmental Fiscal Transfers: A Synthesis of the Conceptual and Empirical Literature, Intergovernmental Fiscal Transfers: Principles and Practice, Analysis of National Water Pollution Control Policies: 2. Moreover, the share of industrial water discharge that was treated by some abatement technology grew substantially in the 1960s (U.S. Census Bureau 1971). For full access to this pdf, sign in to an existing account, or purchase an annual subscription. The 1.4 ratio and the 34-mile calculation from the previous paragraph both use survey weights. Moreover, we are not aware of any existing ex post estimates of the cost required to make a river-mile fishable or to decrease dissolved oxygen deficits. Considering all owner-occupied homes within 25 miles of the river, the estimated ratio of the grants aggregate effects on home values to the grants costs is 0.26. Grant project costs include federal grant amount and required local capital expenditure. Shapiro thanks fellowships from the EPA, MIT-BP, Martin Family Fellows, the Schultz Fund, the Yale Program on Applied Policy, and NSF Grant SES-1530494 for generous support. Municipal and grant costs are cumulative since 1970. As mentioned in the introduction, other recent analyses estimate benefits of the Clean Water Act that are smaller than its costs, though these other estimates note that they may also provide a lower bound on benefits. The Clean Water Act (CWA) establishes the basic structure for regulating discharges of pollutants into the waters of the United States and regulating quality standards for surface waters. Identification from a national time series is difficult, since other national shocks like the 19731975 and early 1980s recessions, high inflation and interest rates, and the OPEC crisis make the 1960s a poor counterfactual for the 1970s and 1980s. Fishable readings have BOD below 2.4mg/L, dissolved oxygen above 64% saturation (equivalently, dissolved oxygen deficits below 36%), fecal coliforms below 1,000 MPN/100mL, and TSS below 50mg/L. Grant costs include local and federal capital expenditures plus operating and maintenance costs over the 30-year life span for which we estimate grants affect water pollution. An official website of the United States government. First is the choice of policy instrument. Volume II, Clean Water Construction Grants Program News, Handbook of Procedures: Construction Grants Program for Municipal Wastewater Treatment Works, The Benefits and Costs of the Clean Air Act, 1970 to 1990, A Benefits Assessment of Water Pollution Control Programs Since 1972: Part 1, The Benefits of Point Source Controls for Conventional Pollutants in Rivers and Streams: Final Report, A Retrospective Assessment of the Costs of the Clean Water Act: 1972 to 1997: Final Report, Progress in Water Quality: An Evaluation of the National Investment in Municipal Wastewater Treatment, The National Costs to Implement TMDLs (Draft Report): Support Document 2, The Clean Water and Drinking Water Infrastructure Gap Analysis, ATTAINS, National Summary of State Information, Water Pollution: Information on the Use of Alternative Wastewater Treatment Systems, From Microlevel Decisions to Landscape Changes: An Assessment of Agricultural Conservation Policies, American Journal of Agricultural Economics. Standard errors are clustered by watershed. One possible channel is that wages change to reflect the improvement in amenities (Roback 1982). The Clean Water Act, by contrast, mostly ignores nonpoint pollution sources like agriculture. Part I: State Pollution Control Programs, The Role of Water Quality Perceptions in Modelling Lake Recreation Demand, The International Handbook on Non-Market Environmental Valuation, The Displacement of Local Spending for Pollution Control by Federal Construction Grants, American Economic Review Papers and Proceedings, Water Pollution Progress at Borders: The Role of Changes in Chinas Political Promotion Incentives, American Economic Journal: Economic Policy, The Missing Benefits of Clean Water and the Role of Mismeasured Pollution Data, The Low but Uncertain Measured Benefits of US Water Quality Policy, Proceedings of the National Academy of Sciences, Replication Data for Consequences of the Clean Water Act and the Demand for Water Quality, Evaluating Public Programs with Close Substitutes: The Case of Head Start. It is possible that areas with more pollution data may be of greater interest; for example, FigureI, Panel C shows more monitoring sites in more populated areas. We find weak evidence that local residents value these grants, though estimates of increases in housing values are generally smaller than costs of the grant projects. All results have been reviewed to ensure that no confidential information is disclosed. Other water pollution research generally specifies BOD and TSS in levels; practices vary for fecal coliforms. Data include years 19622001. It remains one of our nation's most vital safeguards for the health and safety of our communities and our environment. First, we limit regression estimates to the set of tracts reporting home values in all four years 1970, 1980, 1990, and 2000. Non-U.S. studies and more recent U.S. estimates find an even wider range (Gamkhar and Shah 2007). We emphasize a few caveats in interpreting TableIV. The definition also includes standards for boating and drinking water that we do not analyze. Misperception would be less important if most benefits of surface water quality accrue through recreation or aesthetics, since failing to perceive water pollution through any means would mean its effects on recreational demand are limited. Column (2) adds controls for dwelling characteristics, and for baseline covariates interacted with year fixed effects. Share sensitive information only on official, secure websites. The historic law was designed to protect all of our waters - from the smallest streams to the mightiest rivers - from pollution and destruction. The U.S. Environmental Protection Agency (EPA) and the U.S. Army Corps of Engineers (Corps) final " Clean Water Rule " issued on Wednesday reduces the agencies' jurisdiction to protect waters that have been covered under the Clean Water Act (CWA) since the 1970s. Other sources note that these time series trends are consistent with aggregate crowding out (Jondrow and Levy 1984; CBO 1985). Row 8 equals row 1 divided by 30 times row 6. The top decile of counties includes ratios between 0.31 and 0.41. \end{equation}, \begin{equation*} 1974 Report to the Congress. Fifth, the 25-mile radius is only designed to capture 95% of recreational trips. Point sources are discrete conveyances such as pipes or man-made ditches. Federal spending grew to between |${\$}$|10 and |${\$}$|20 billion a year in the late 1970s. They suggest similar conclusions as Panels A and B. The tables separately list the different components of costs, and Section VII.C discusses possible effects of these costs on local taxes or fees. Effects of Clean Water Act Grants on Water Pollution. With mounting public demand, Congress passed what remains one of the most popular and effective environmental laws our nation has ever had, the Clean Water Act. This chart shows the health benefits of the Clean Air Act programs that reduce levels of fine particles and . This early version of the CWA left sanitation planning up to the surgeon general, and allowed the Federal Works Administration to help local and state governments with prevention and cleanup efforts. Row 5 is calculated by multiplying each grant by the parameter estimate in Online Appendix TableVI, row 13, column (2), and applying the result to all waters within 25 miles downstream of the treatment plant. Smith and Wolloh (2012) study one measure of pollution (dissolved oxygen) in lakes beginning after the Clean Water Act and use data from one of the repositories we analyze. Others relate drinking water quality directly to health (Currie etal. The ratio of the change in housing values to federal capital costs in columns (2)(4) of TableVI ranges from 0.8 to 0.9; the ratio of the change in housing values to the sum of federal capital costs and operating costs (but excluding local capital costs) in these columns is around 0.3. Our approach focuses on the effects of cleaning up an individual site and is not as well suited to capture the potentially distinct effects of cleaning up entire river systems. Under the CWA, EPA has implemented pollution control programs such as setting wastewater standards for industry. Adding rental units in column (3) barely changes this estimate. What are pros and cons of legalism? 2001; Steinwender, Gundacker, and Wittmann 2008; Artell, Ahtiainen, and Pouta 2013). Row 12 of Online Appendix TableVIII reports this specification and finds similar and if anything slightly less positive change in home values than the main results estimate, which is the opposite of what one would expect if city taxes, sewer fees, or other local costs depressed home values. The main regression sample includes only a balanced panel of tracts that appear in all four censuses between 1970 and 2000; imputing values for missing homes hardly changes the ratio in column (4). This tells us little about the Clean Water Acts effects, however, since its investments may take time to affect water pollution, expanded during the 1970s, and may be effective even if not obvious from a national time series. Column (4) includes imputed home values for the nonmetro areas that were not in the 1970 or 1980 census.24, Clean Water Act Grants: Costs and Effects on Home Values (|${\$}$|2014B|$\mathrm n$|). Standard errors are clustered by watershed. The point estimates imply that the benefits of the Clean Water Acts municipal grants exceed their costs if these unmeasured components of willingness to pay are three or more times the components of willingness to pay that we measure. Column (2) includes plants in the continental United States with latitude and longitude data. Most others are statistically indistinguishable from the mean grant, though there is some moderate (if statistically insignificant) heterogeneity in point estimates. Another possible channel involves ecology. The USEPAs (2000a) cost-benefit analysis of the Clean Water Act estimates that nonuse values are a sixth as large as use values. From Exxon to BP: Has Some Number Become Better than No Number? If approved, it will protect clean drinking water, upgrade water infrastructure, preserve open space and family farms, fight climate change, and keep communities safe from extreme weather,. The product is a tablet that turns any type of substance into clean substance. Propensity score for appearing in the balanced panel of cities is estimated as a function of log city population, log city total municipal expenditure, city type (municipality or township), and census division fixed effects, where city population and expenditure are averaged over all years of the data. Pass-through of Grants to Municipal Sewerage Capital Spending. FigureIV shows event study graphs, which suggest similar conclusions as these regressions. Year-by-year trends for the other pollutants in the main analysisthe share of waters that are not swimmable, BOD, fecal coliforms, and TSSshow similar patterns (Online Appendix FigureIII). When we fit the change in home values, we do so both for only the balanced panel of tract-years reporting home values, and for all tract-years. We now turn to estimate the cost-effectiveness of these grants. This implies that pollution levels in upstream and downstream waters had similar trends before grants were received. Published by Oxford University Press on behalf of the President and Fellows of Harvard College. Each observation in the data is a pollution reading. These estimates are even less positive than the estimates for housing. We include all capital and operating and maintenance costs in the measure of total grant project costs. Each grant significantly decreased pollution for 25 miles downstream, and these benefits last for around 30years. 2001; Jeon etal. Paperless Cons. We estimate the value of wetlands for flood mitigation across the US using detailed flood claims and land use data. Flint potentially could have prevented these problems by adding corrosion inhibitors (like orthophosphate), which are used in many cities (including the Detroit water) that Flint previously used, at low cost. Many travel demand papers use small surveys that report distance traveled to a specific lake or for a narrow region. Column (3) includes all plants and grants with minimum required data (e.g., grants linked to the exact treatment plant even if without latitude or longitude data) and assumes all plants have 25 miles of rivers downstream. A third question involves substitution. In total over the period 19722001, the share of waters that are not fishable and the share not swimmable fell by 11 to 12 percentage points. Q_{pdy}=\gamma G_{py}d_{d}+X_{pdy}^{^{\,\,\prime }}\beta +\eta _{pd}+\eta _{py}+\eta _{dwy}+\epsilon _{pdy}. The Clean Water Act has protected our health for more than 40 years -- and helped our nation clean up hundreds of thousands of miles of polluted waterways. Two studies report that concrete structures of treatment plants are expected to have a useful life of 50years, but mechanical and electrical components have a useful life of 1525years (USEPA 2002, 11; American Society of Civil Engineers 2011, 15). Rainwater monitors that are not in our data record increases of similar magnitude in rainwater pH over this period, and attribute it to declines in atmospheric sulfur air pollution (USEPA 2007). These calculations use our regression estimates and the cost data. Online Appendix E.3 discusses interpretations of our housing estimates under alternative pass-through numbers. Dependent variable is municipal sewerage capital investment. Journal of the Association of Environmental and Resource Economists, Environmental Policy Choice: Pollution Abatement Subsidies, Water Pollution Policy. Leads decrease of about 10% a year may be related to air pollution regulations, such as prohibiting leaded gasoline. Our recreation data also represent all trips, and water-based recreation trips might require different travel distances. Although a point estimate of 0.41 for the ratio of benefits to costs does not exceed 1, one should interpret this value in light of the discussion from the next subsection that it may be a lower bound on true benefits. TableIV reports estimates corresponding to equation (5). Parts of the Clean Air Act use cap-and-trade systems, but nearly none of the Clean Water Act does. The map in Online Appendix FigureVIII shows heterogeneity in the ratio of measured benefits to costs across U.S. counties.
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